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Eclipse Aviation — will it survive?

Below is a report that will be filed shortly about Vern Raburn and his Eclipse Aviation.

By James Wallace
P-I aerospace reporter

‘As a self-described “aviation nut,” Vern Raburn – the former software executive and one of the early employees of Microsoft who remains a close friend of Bill Gates – was well aware of a famous saying in the aviation industry: The way to make a small fortune is to start with a big fortune.

The charismatic, high-tech whiz raised at least a billion dollars from investors, including Gates, who were willing to hitch a ride on his dream that Eclipse Aviation, the company Raburn founded in 1998, could produce light and inexpensive six-seat jets (a pilot and five passengers) that would become an air-taxi service for the masses.

But last week, while Raburn was at the famed Oshkosh air show, where his friend and actor John Travolta was promoting prompting Eclipse Aviation, Raburn was ousted by his board, leaving questions about not only the future of the company but about the legacy of a computer industry pioneer who believed he could draw on software development background to transform general aviation.

Eclipse Aviation has stumbled badly. Raburn’s cutting-edge jet was late, mainly because of engine problems and then certification delays. More than 2,000 have been sold to customers who have put down nonrefundable deposits. But as of last week, only 235 had been delivered – in two years. Getting the supply chain working smoothly, and the production system up to speed, are the biggest challenges ahead.

“Every month we are doing a little better than the last,” Michael McConnell, vice president of sales and marketing for Eclipse Aviation, said Tuesday in an interview.

The immediate goal is to get to a production rate of one plane a day, he said, and eventually two a day sometime next year.

But only 200 to 250 jets are expected to be delivered this year.

Meanwhile, the price of the plane was hiked a couple month ago from $1.5 million to $2.15 million. Raburn had initially promised a jet that would sell for less than $900,000.

“We were moving the break-even point to the left,” McConnell explained of the big price hike.

the current price, though, is not much less than the $2.8 million for a Citation Mustang, the next cheapest Very Light Jet.

Raburn has said little about what happened.

“The company, while we accomplished a lot, has not achieved everything we said it would,” he told the Wall Street Journal. “As you know, debt holders don’t have much of a sense of humor and aren’t very forgiving when it comes to this.”

Raburn founded Eclipse aviation in Albuquerque, N.M., where Gates and Paul Allen had initially started Microsoft in 1975.

“I spent 25 years in the high-tech world, and if there is one thing that the high-tech business brought to the world of business it is a different way of thinking about risk and market creation,” Raburn told me in a 2002 interview.

I had first talked with Raburn in 1991, for my book “Hard Drive,” which was about Gates and the formation of Microsoft. Raburn, Microsoft’s 18th employee, was hired shortly after Gates and Allen moved Microsoft from Albuquerque to Bellevue in the late 1970s. As Microsoft’s first president of its new consumer products division, Raburn licensed the hit game Flight Simulator from its creator Bruce Artwick.

Raburn always loved aviation.

In 1987, the year after Microsoft went public, Raburn had bought Travolta’s Lockheed Constellation for $100,000. He and his wife spent more than $1 million refurbishing it over the next decade. At the Oshkosh show in Wisconsin, Travolta showed up in his Eclipse jet, which has a cockpit not unlike a computer. The pilot can touch a screen to input commands. The control wheel is a sidestick controller that looks more like a computer game joy stick.

Raburn had left Microsoft in 1982 and later went to work for a while for his old friend Allen as president of the Paul Allen Group.

The idea behind Eclipse Aviation began when Raburn was flying around the country for Allen. He wasted a lot of time flying in and out of big airports. From that frustration was born the Eclipse, a small, inexpensive, light-weight jet. Raburn envisioned more than 10,000 of his jets operating from more than 5,000 small airports.

Raburn had once told me the Eclipse factory would easily produce more than 1,000 of the jets a year, a fraction of the usual assembly time.

The manufacturing breakthroughs in the Eclipse factory included a process known as friction stir welding that The Boeing Co. used at its Delta 4 rocket plant in Alabama. Eclipse hired a top Boeing executive from that plant.

“What we have here is a high-tech view of the world, combined with a passion, combined with some new technology, all of which is combined with some real-world understanding of value creation of the need for transportation from other than the 26 major hubs,” Raburn told me in that 2002 interview.

Instead, Raburn is now only an adviser to Eclipse. He will be vice chairman at European Technology and Investment Research Center Aviation, or ETIRC Aviation, which bought a $100 million equity stake in Eclipse. Roel Pieper, chairman of ETIRC Aviation, replaced Raburn as acting chief executive for Eclipse.

“As founder and CEO, Vern can be credited with creating the now prevalent very light jet category and achieving what the industry did not think possible,” Pieper said in a statement when Eclipse announced the management change.

Richard Aboulafia of the Teal Group, an industry consulting firm in Fairfax, Va., once thought Raburn was another Preston Tucker, who dreamed of developing a new kind of car after World War II but in the end failed.

Aboulafia now says the comparison with Tucker would be too kind to Raburn.

Eclipse Aviation is one of the most “dangerous programs this industry has seen,” Aboulafia said. “What has happened sends a chill through the industry and its investors. It’s a good way to make investors disenchanted with aviation.”

“I’m appalled,” Aboulafia said. “Raburn essentially destroyed a billion dollars. That’s a serious pile of cash to burn through and not have very much to show for it.”

Note: This is a seattlepi.com reader blog. It is not written or edited by the P-I. The authors are solely responsible for content. E-mail us at newmedia@seattlepi.com if you consider a post inappropriate..